The behaviour of gelatinized starch plasticized with glycerol (also known as thermoplastic starch (TS)) is studied as the dispersed component in a polyethylene (LDPE or LLDPE) matrix. A processing technique was developed to compound the blends in one continuous process in a co-rotating twin-screw extruder fed by a single-screw extruder. The use of the single-screw as a side feeder allowed for gelatinization of the starch before feeding it into the twin-screw at controlled temperature and pressure. The screw configuration of the twin-screw extruder maintained high pressure (greater than or equal to 0.9 MPa) during blending to prevent early evaporation of water. These materials displayed morphological characteristics typical of immiscible polymer-polymer blends. The number-average diameter of the dispersed phase increased from 4 mu m with 8 wt% TS to 18 mu m with 36 wt% TS in LDPE blends. It ranged from 3 to 8 mu m in LLDPE blends containing 7 to 39 wt% TS. These results therefore indicate the possibility of achieving a level of morphological control with respect to the size and shape of the dispersed phase in these systems. Dry granular starch, on the other hand, typically is dispersed as a spherical like particle with a fixed morphology of approximately 10 mu m. The blends in this study, at high TS loadings, demonstrate high elongational properties at break even without addition of an interfacial modifier. The LDPE blend containing 22% TS had 240% elongation at break and its modulus was 109 MPa. The LLDPE blend containing 39% TS had more than 540% elongation at break, while the modulus was 136 MPa.